In Michigan’s current housing market, you’ll find that conditions are predominantly geared toward sellers. With older, existing homes selling quickly and at high prices ($246,400 on average), options like spec homes and custom homes are becoming more appealing to potential buyers.
What Is a Spec Home?
A spec home, or speculative home, is built by developers or builders with a general market trend in mind. These homes are constructed without a specific buyer, allowing the builder to make decisions about the home’s designs, features, and finishes based on what they believe will appeal to potential buyers. These homes may also be referred to as inventory homes or move-in ready homes.
What Is a Custom Home?
Comparatively, a custom home is exactly as it sounds—it is tailored to fit your specific preferences and needs. When you opt for a custom home, you are involved in the decision-making process from the ground up, selecting everything from the plot of land your home will sit on to the layout of each room to the type of flooring used throughout the home.
Pricing
When searching for homes, budget is obviously a major factor. Don’t be put off by the initial listing price—instead, look at what the home offers and whether it can benefit your lifestyle.
We’ll get into some of the significant features of spec and custom homes, but what’s important to know is that both options tend to be higher priced than existing homes—and for a reason. These homes are built with new materials and new appliances. You won’t have to worry about suddenly needing to replace the water heater or immediately dealing with minor handyman repairs.
When comparing the prices between spec and custom homes, spec homes usually have lower prices. This is because the builders who construct these homes buy materials in bulk and plan cost-effective designs that appeal to a broad market. They often build multiple homes within the same community using similar or identical plans and materials, which reduces construction and design costs. Additionally, because these homes are designed to sell in the current market, builders are mindful of keeping them affordable to potential buyers.
Custom homes, by contrast, are generally more expensive due to the level of customization involved. Building a custom home means starting from scratch—selecting every detail tailored to your specific tastes and requirements, from the architectural style to the finishes. Every aspect of the home can be customized, which often involves more expensive materials and unique construction challenges.
But, if you’re seriously considering a custom home over spec, don’t let this fact scare you. During custom home projects, you are 100% in control of your budget. At the start of the project, your builder will ask about your budget and provide recommendations that fit within your budget and preferences. On the other hand, you have no control over the cost of a spec home.
Key Takeaways:
- Spec homes tend to be less expensive
- Custom homes allow for more budget control
Features
Both spec and custom homes usually come with high-value features, like energy-efficient appliances, and every aspect of the home is new.
The primary difference is that with custom homes, you have more control over what specific features you get. The features in spec homes are determined by the builder, who makes decisions based on current market trends and general buyer appeal. Designs, fixtures, and finishes are often neutral to attract a wider audience and typically have open floor plans. If you buy early enough in the building process, you may have the opportunity to choose certain elements like paint colors or flooring materials, but the structural design and room layouts are usually set.
With custom homes, your feature options are nearly limitless. Maybe you’ve wanted a good sunroom for your Money Tree or a fireplace to enjoy in the winter. With a custom home, you could get both if it’s within your budget. You also have the freedom to select everything from the layout of your home and the size of the rooms to the type of flooring and brand of appliances.
The option you choose really depends on how much control you want to have. Do you want something quick, modern, and standardized, or a home that’s literally built for you?
Key Takeaways:
- Both have modern designs, energy-efficient appliances, and high-value features
- Custom homes offer more design and feature flexibility
Long-Term Investment Potential
When you’re moving into a home or considering buying a new one, the concept of selling is likely not crossing your mind. You can’t know what the future holds for you, but you can prepare for the possibility of moving by investing in a home that will grow in value.
Both options offer high long-term investment potential, but the difficulty of “resale” is generally determined by the home’s location and market conditions.
Spec homes, in particular, can be a solid investment in a high-demand market just because they are modern and designed to appeal to a broader audience. The downside is that, depending on when you sell your home, its modern features could be outdated and not appeal to current buyers. Additionally, spec homes aren’t unique and feature similar designs within communities, so there could potentially be a lot of competition with similar properties, making it challenging for your home to stand out.
From a financial perspective, custom homes may see substantial appreciation because they’re built with high-quality materials, feature modern designs, and are (typically) in highly desirable locations. However, the very customization that makes the home uniquely suited to your tastes might not appeal to the average buyer, potentially complicating resale.
Key Takeaways:
- Both offer long-term investment potential
- Spec homes could appeal to more buyers
- Spec homes could be more challenging to sell if multiple homes within the same community/location are up for sale
- Location and current market conditions ultimately determine resale challenges
Move-in Time
Spec homes are called move-in ready homes for a reason—since these homes are often partially or fully completed by the time they are put on the market, the timeline from closing the sale to moving in can be very short. In most cases, you could move within weeks of purchase, if not immediately. This quick time frame is particularly appealing for buyers who need a home quickly due to relocation, the sale of their previous home, or other time constraints.
In contrast, custom homes require a longer timeline. The process includes several phases: planning and design, obtaining permits, construction, and final inspections before move-in. Each stage can take considerable time, with the entire process often taking anywhere from several months to over a year, depending on the complexity of the project and other external factors like weather or supply delays. During a custom home build project, the builder will provide an estimated timeline to make planning easier.
Key Takeaway:
- Spec homes are better for people who need to move into a home quickly due to relocation or other time constraints
Location
Spec homes are usually built in developments or communities, so your options for location are typically limited to where the builder is currently active. The advantage here is that these communities often have planned amenities like parks, community centers, and sometimes even schools or shopping areas. They are strategically located to be attractive to a large number of buyers. However, if you have a specific neighborhood or setting in mind that’s outside of a new development area, finding a spec home that meets your needs might be more challenging.
Custom homes offer more location flexibility. You can choose exactly where you want to live, whether it’s in a quiet rural area, near a major city, or even on a plot of land you already own. This flexibility lets you prioritize what’s most important to you, be it privacy, scenic views, proximity to work, or being near family and friends.
Key Takeaways:
- Spec homes are often in amenity-abundant communities
- Custom homes offer more location flexibility
Move Into Your Dream Home With Help From Cherry Creek Building
Spec homes and custom homes are advantageous in their own ways—custom homes are ideal for buyers who want total control of the design and features of their home, while spec homes are great for individuals or families who want to move into a new home as quickly as possible.
If you’re considering a custom home, schedule a consultation with Cherry Creek Building. We specialize in building homes throughout Southeast Michigan. We have pre-built communities, or we can construct a home on a lot you’ve already purchased.
Please visit our website to learn more about our available models and features, or complete our online form to schedule your consultation.